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Oil rises again but global economic concerns cap gains
[NEW YORK] Crude prices edged higher on Thursday, supported by comments from the US Federal Reserve chairman that lifted equity markets, but a more than week-long oil rally slowed as optimism surrounding US-China trade talks faded.
Brent crude futures rose 24 cents, or 0.4 per cent, to settle at US$61.68 a barrel. The global benchmark posted its first consecutive nine-day winning streak since September 2007.
West Texas Intermediate crude ended 23 cents, or 0.4 per cent, higher at US$52.59 a barrel, also its ninth straight day of gains, that beats a 2010 record.
Earlier in the session, both benchmarks hit their highest in nearly a month. WTI hit a session high of US$52.78 per barrel and Brent rose to US$61.91 a barrel.
Global financial markets have climbed recently on hopes that Washington and Beijing would avert an all-out trade war. The two superpowers concluded three days of talks on Wednesday.
But the rise in global markets began to dwindle after the world's two largest economies issued vaguely positive statements that lacked concrete details.
Comments by Federal Reserve Chairman Jerome Powell on Thursday helped boost riskier asset classes, including oil, late in the session.
Mr Powell said the US central bank had the ability to be patient on policy, but that the Fed would shed significantly more assets than it already has.
"It was a mixed message from him, but I think it was sufficiently accommodative," said John Kilduff, a partner at Again Capital Management. "It's a continuation of that shift towards easier policies and more assistance to the underlying economy which helped boost crude oil prices."
US equity markets broadly rose after the comments. Recently crude futures have tracked closely with Wall Street.
However, investors remained worried about a potential slowdown in the global economy, with disappointing data from China overnight adding to concerns.
China's producer prices in December rose at their slowest pace in more than two years, a worrying sign of deflationary risks.
Market participants also were paying close attention to global crude supply, particularly a shale boom in the United States. US crude oil production has held around a record high of 11.7 million barrels per day since early November, according to government data.
To counter rising US output, the Organization of the Petroleum Exporting Countries and its allies, including Russia, reached a deal to rein in supply that officially began in January.
Barclays forecast that Brent will remain range bound at US$55 to US$65 per barrel as inventories build in the coming months, while it expects "the market will return to a balanced state" by the second half of 2019.
Iranian Oil Minister Bijan Zanganeh said on Thursday US sanctions against his country were "fully illegal" and Tehran would not comply with them.
The Opec deal had hung in the balance on concerns that Iran, whose crude exports have been depleted by US sanctions, would receive no exemption and block the agreement.